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Business Groups Back Phaseout Of POGOs

Business Groups Back Phaseout Of POGOs

Business groups are supporting the complete phaseout of Philippine offshore gaming operators (POGOs) in the country, emphasizing that the social and reputational costs of government sponsorship of such operations outweigh any economic benefits.

“We fully support the Department of Finance (DOF)’s push to phase out all POGO operations, and urge our legislators and the executive department to take all actions necessary to execute them in an orderly way,” the Management Association of the Philippines (MAP), Makati Business Club (MBC) and the Foundation for Economic Freedom (FEF) said in a joint statement yesterday.

The social and reputational costs of government sponsorship of operations that are globally frowned upon outweigh any economic benefits, according to MAP, MBC and FEF.

“For the past years, regulatory oversight has been a problem, resulting in monitoring and taxation issues with our licensing agency, the Philippine Amusement and Gaming Corp. (PAGCOR). Conflicting mandates and the lure of corruption have rendered it and other involved government agencies incapable of effectively regulating POGOs,” they said.

They also pointed out that crimes, like money laundering, kidnapping, bribery, prostitution, human and drug trafficking – all associated with the gambling industry – impact the country’s reputation and record of law and order.

“The taint of money laundering diminishes confidence in our banking system and puts legitimate financial flows, including from OFWs (overseas Filipino workers), at risk from sanctions of international oversight bodies. Our connectivity to international banking, and the business and OFW communities who depend on it, must be protected,” they said.

MAP, MBC and FEF also explained that since the onset of the COVID-19 pandemic, the POGO industry has significantly declined by 50 percent to 70 percent.

“This suggests that now is the best time to terminate their operations,” the three groups said.

“The total ban will only result in temporary economic strains, as opposed to the enduring socioeconomic consequences and heavier disruption if we do not act now,” they added.

The groups also cited that the Chinese government has been quite categorical in its objections to POGOs, which they characterized as “harming not only China’s interest and China-Philippines relations, but also hurt the interests of the Philippines.”

During the House of Representatives committee on labor and employment hearing last week, Finance Undersecretary Cielo Magno said the country is estimated to lose about P64.61 billion in economic contributions should the government decide to discontinue the operations of POGOs in the country.

Of the estimated losses, almost 40 percent will come from housing space rentals income at P25.17 billion.

Another P16.63 billion from office space rentals will be lost, while P6.56 billion will be dropped from personal consumption of POGO employees and another P3.5 billion from revenues of PAGCOR.

The government is also expected to lose P3.43 billion from value-added taxes (VAT) of housing space rentals and P3.09 billion from transportation.

Other losses will stem from personal income taxes from POGO employees (P2.74 billion), VAT from office space rentals (P2.27 billion), other taxes (P830 million), corporate income tax (P340 million) and insurance (P50 million).

Magno emphasized concerns over POGO-related crimes, which can have direct effects on the country’s foreign direct investments (FDIs).

“One crime incidence in every 100,000 population can result in a GDP decline of one percent,” she said earlier.

“We estimate that potential losses with respect to FDIs for the Philippines will range from P16.7 billion to P26.2 billion,” she added.

The DOF official also argued about the additional cost that the government will incur for enforcers to ensure security and eliminate crimes.